Archive

As might be expected, I’m getting more calls lately from advisors, on behalf of their clients, asking what should be done about life insurance no longer needed for estate liquidity purposes.

I generally answer the same way every time; “Let’s evaluate the policy and then talk about options.” Depending on the client situation, the first issues I discuss with the advisor is what happens when the current estate tax law sunsets, and does your client really want to bank on what the tax laws will be, 17, 28 or 42 years from today? With life insurance, it seems many people will jump on a reason to walk away. For full post, click here…

Three rules to remember for layering in a basic level of protections for your clients.

While there’s likely no way to ultimately ensure your clients won’t be victims of fraud, there are a few things to be done that may help prevent it, as well as assist in recovery efforts if they’re victims. For full post, click here…

I periodically peruse the web to see what other insurance professionals are writing about. Sometimes I agree wholeheartedly and sometimes I just shake my head.

Recently I saw a piece where the author was warning about “Optimizing” an insurance portfolio. I get exactly what he is saying. His point is to beware of marketing and warn that a given advisor was likely promoting a specific idea. I offer practically identical warnings regularly. The subtext was that there is no objective “best” so how could one maximize or optimize planning. This is true but something about it bothers me. Read more…

A relationship manager at a bank called to tell me his client asked him if he should be paying the loan interest on his life insurance policy. Good question, but where does one start? I too often witness agents, advisors and policy owners go with a gut feeling rather than perform even a simple empirical analysis of the situation. Here is how I approached this. Read more…

Lately I have been involved in a few situations where there was clearly a lack of understanding about the concept of Policy Maturity and what it means. This post will not attempt to be terribly technical nor an exhaustive history of the evolution of life insurance but rather a summary of what most advisors and policy owners need to know regarding Policy Maturity. Not understanding the basics can be the cause of significant distress and regret. Read more…

The life settlement market isn’t what it used to be but it’s not dead. We have negotiated a couple of life settlement transactions lately, so I have been reviewing IRS Revenue Rulings pertaining to gain. It’s been almost three years since the IRS provided guidance so I thought this would be a good time for a refresher.

I continue to be amazed at the willingness of consumers in the market to put significant life insurance transactions in force with no outside analysis and no evident level of sophistication. Here is a very simple example.

Recently I was involved in some planning where the annual premium was $150,000 a year on a full pay basis for the desired death benefit. At least 99 out of 100 situations I get brought into involve a level premium scenario because when one hits the button on the computer, this is what comes out and little further thought or analysis is brought to the table.

In this situation we have a 77 year old individual and we played around with the premium flow. Read more…

As the founder and principal of Opportunity Concepts, LLC, a life insurance consulting and management practice, my days are filled working with policy owners and their advisors regarding many aspects of life insurance, from simple front-end, second opinions to in-depth, actuarially defensible analysis of portfolios of policies. This is the story of a “typical” engagement.

Clients and advisors seek me out for my fee-based approach to life insurance consulting. While there are great life insurance professionals who do a good job and bring tremendous value on a commission basis, some policy owners and advisors in the market have had experiences which leave them cynical. One answer is to pay a consultant for analysis and advice. Read more…

I regularly get asked about the “Insurance Triangle”, what it is and how it plays into things. This is a reference to the “Goodman Triangle” Goodman V. Commissioner, 156 F.2d 218

In this case Mrs. Goodman transferred five existing policies insuring her husband’s life to a Revocable life insurance trust. Beneficiaries of the trust were her three children and her sister-in-law. About a decade later her husband died and the trust became irrevocable.Read more…

I am writing about this 2006 law today because, from my perspective and through personal experience, I do not see very many insurance and professional advisors talking with their clients about this issue. The potential downside in terms of unexpected Read more…